Lately, inflation has been off our collective radar screens. You don’t hear officials at the Federal Reserve talking about it. You don’t hear much talk about it down on Wall Street. And you don’t hear the pundits mentioning it either.

But in the real world of people, places and things, there is plenty of grousing about inflation. This is because the cost of buying of all kinds of goods and services is going up, and it’s beginning to hurt the proverbial man or woman on the street.

How can this be, you say, when the government’s data show inflation for the most part under control? Simple: The government’s surveyors are missing two subtle but important kinds of inflation. At the same time, they are not fully taking into account changes in buying patterns, not to mention the cost of such obscure items as service contracts.

Besides actually raising prices, companies can also shrink package sizes while keeping prices unchanged. Another way they can give you less for your money is to dilute the product by replacing expensive ingredients with cheaper ones, such as water, for example.

Sharp-eyed surveyors can spot actual price increases or changes in package size, but few are on the lookout for product dilution.

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For example, several popular detergents don’t clean as efficiently as they used to — unless you use more of them. Foods are also subject to this gambit. Chickens might have fluid pumped into them to increase their weight, and thus their selling price. Ice cream can be watered down to the point where it can no longer use the word “cream” in its name.

Why would any company take such measures? To increase profits, of course, without alienating customers whose incomes are already buying less than they used to because unemployment is still high while wages are stagnant.

In this kind of environment, companies can look bad if they boldly raise prices while everyone else is seemingly holding the line or even cutting a tag or two. That’s why they try to disguise these increases any which way they can.

If this were not enough to confound the government’s surveyors, they have to contend with changes in buying patterns. When prices rise, consumers try to cushion the blow by switching to cheaper items, such as substituting lower-price chicken for more expensive meat.

However, there is a limit to what people can do. For example, it is hard to blunt the rising cost of food, health care, income and property taxes and water bills.

This off-the-books inflation is a byproduct of the massive amount of liquidity that the Fed has pumped into the economy. Some of it buoyed the stock market, while the rest is slowly seeping into the real economy.

So the next time some wag inside the Beltway tells you inflation is too low, tell that person to check out what’s going on in the real world.

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